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The Trajectory of American Corporate Governance: Shareholder Empowerment and Private Ordering Combat

73 Pages Posted: 22 Feb 2017 Last revised: 7 Jan 2018

Jennifer G. Hill

The University of Sydney Law School ; European Corporate Governance Institute (ECGI)

Date Written: January 2018


Shareholder power and activism are hot issues in the United States and around the world. Although some jurisdictions have welcomed greater shareholder involvement in corporate governance, this prospect has been met with widespread apprehension in the United States. There is a paradox here. Although the United States is generally regarded as the birthplace of shareholder activism, in fact, US shareholders have traditionally possessed far fewer corporate governance rights than shareholders in other common law jurisdictions.

This article discusses the trajectory of corporate governance and evolving shareholder rights in the United States, in the context of the shareholder empowerment and proxy access debates. It considers recent corporate governance developments, including institutional activism and the phenomenon of ‘private ordering combat’ through bylaw amendments, which potentially readjust the balance of power between shareholders and the board of directors in US public corporations.

The article also explores the intriguing underlying question of why shareholder empowerment is such a controversial issue in the United States, compared to some other common law jurisdictions, such as the United Kingdom. To explain this puzzle, the article looks to legal history and to the fundamentally different organizational origins of US and UK corporate law. The article argues that organizational origins matter, and that the divergent origins of US and UK corporate law contribute to attitudinal differences in relation to shareholder power and the role of shareholders in corporate governance.

Keywords: Delaware general corporation law, shareholder activism, institutional investors, shareholder power, private ordering, proxy access, corporate charters and bylaws, bylaw amendment, US corporate law, UK company law, legal history, organizational origins

JEL Classification: D70, G30, G34, G38, K22, K39, N0

Suggested Citation

Hill, Jennifer G., The Trajectory of American Corporate Governance: Shareholder Empowerment and Private Ordering Combat (January 2018). Sydney Law School Research Paper No. 17/13; European Corporate Governance Institute (ECGI) - Law Working Paper No. 343/2017. Available at SSRN: or

Jennifer G. Hill (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
+61 2 9351 0280 (Phone)
+61 2 9351 0200 (Fax)

European Corporate Governance Institute (ECGI)

B-1050 Brussels

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